Return on Equity (ROE)
since 2014
Calculation
Paycom Software Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net income1 | ÷ | Stockholders’ equity1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2022 | 23.79% | = | 100 | × | 281,389) | ÷ | 1,182,607) |
| Dec 31, 2021 | 21.93% | = | 100 | × | 195,960) | ÷ | 893,714) |
| Dec 31, 2020 | 21.88% | = | 100 | × | 143,453) | ÷ | 655,643) |
| Dec 31, 2019 | 34.29% | = | 100 | × | 180,576) | ÷ | 526,628) |
| Dec 31, 2018 | 40.95% | = | 100 | × | 137,065) | ÷ | 334,753) |
| Dec 31, 2017 | 49.34% | = | 100 | × | 66,807) | ÷ | 135,402) |
| Dec 31, 2016 | 37.62% | = | 100 | × | 43,840) | ÷ | 116,527) |
| Dec 31, 2015 | 21.30% | = | 100 | × | 20,945) | ÷ | 98,314) |
| Dec 31, 2014 | 7.64% | = | 100 | × | 5,663) | ÷ | 74,138) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 US$ in thousands
The financial performance from 2014 to 2022 is characterized by substantial growth in both absolute profitability and the capital base, though the efficiency of equity utilization has experienced significant volatility over this period.
- Net Income Trends
- Net income exhibited an aggressive upward trajectory for the majority of the period, rising from US$ 5.66 million in 2014 to a peak of US$ 281.39 million in 2022. A temporary contraction occurred in 2020, where net income fell to US$ 143.45 million from US$ 180.58 million the previous year, before recovering strongly in the subsequent two years.
- Stockholders' Equity Expansion
- The equity base grew consistently and significantly, expanding from US$ 74.14 million in 2014 to US$ 1.18 billion by 2022. A notable acceleration in equity accumulation occurred between 2017 and 2019, with the balance increasing from US$ 135.40 million to US$ 526.63 million, indicating a period of rapid capital retention or infusion.
- Return on Equity (ROE) Dynamics
- ROE followed a distinct cyclical pattern. An initial phase of rapid improvement saw ROE climb from 7.64% in 2014 to a peak of 49.34% in 2017. This was followed by a period of compression, with ROE declining to 21.88% by 2020. This decline is attributable to the equity base growing at a rate that exceeded the growth of net income.
- Recent Performance Stabilization
- Between 2020 and 2022, ROE entered a phase of stabilization, fluctuating within a narrow range between 21.88% and 23.79%. This suggests that the relationship between net earnings and stockholders' equity has reached a more sustainable equilibrium following the volatility seen in the preceding five years.
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Comparison to Industry (Industrials)
Paycom Software Inc., ROE, long-term trends, comparison to industry (industrials)
| Paycom Software Inc. | Industrials | |
|---|---|---|
| Dec 31, 2022 | 23.79% | 15.38% |
| Dec 31, 2021 | 21.93% | 15.38% |
| Dec 31, 2020 | 21.88% | 0.24% |
| Dec 31, 2019 | 34.29% | 14.56% |
| Dec 31, 2018 | 40.95% | 17.95% |
| Dec 31, 2017 | 49.34% | 18.24% |
| Dec 31, 2016 | 37.62% | 21.69% |
| Dec 31, 2015 | 21.30% | 16.11% |
| Dec 31, 2014 | 7.64% | 19.68% |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).